Health insurers in some markets could have a special, local kind of problem with one of three new “three R’s” risk-management programs: the risk-adjustment program.
Before an insurer in a market can collect the risk-adjustment program cash transfers it’s expecting to receive for the 2014 benefit year, the insurers in the market that owe the payables have to pay their risk-adjustment program bills.
Officials at the Center for Consumer Information and Insurance Oversight (CCIIO), the division of the Centers for Medicare & Medicaid Services (CMS) in charge of the risk-adjustment program, acknowledge in a memo to insurers that, “in rare circumstances,” CMS could have trouble collecting payments from health insurers that owe payables for 2014.
“CMS will use all appropriate debt collection processes available to the federal government to enforce the collection of risk-adjustment charges,” officials say in the memo, which is posted on the semiprivate Regtap website.
If CMS is unable to get an insurer to make full payment for 2014 risk-adjustment charges on time, “2014 benefit-year risk-adjustment payments for that risk pool will be adjusted on a pro-rata basis to reflect the undercollection,” officials say. “Risk-adjustment charge for other issuers in the risk pool would not be affected.”
An issuer can reflect the reduced risk-adjustment payment in the risk corridors and medical loss ratio (MLR) report filed in the following year, officials say.
PPACA drafters created the permanent risk-adjustment program, along with a temporary reinsurance program and a temporary risk corridors program, in an effort to keep PPACA underwriting and benefits design changes from drowning insurers.